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More VISA Debit Card Charges!

Will your business profitability be effected by the increase in charges on VISA Debit card transactions?

From the 1st March instead of the processing charge being a flat rate charge for each type of transaction being paid to the processor i.e. Barclaycard, World pay etc. this will be changing to a % of the transaction value. So for a business with high average transaction values the could see a dramatic increase in merchant card processing costs. The individual Merchant processors have different pricing structures for the of quantity of transactions your business carriers out. For businesses with average low value, but dealing in a high volume transactions the charge per transaction should be lower on this basis but additional charges to provide the service may have been levied by some processors.

However there are new rules from the EU to cap the fees retailers pay to process both debit and credit card transactions. This will come into force six months after the legislation is passed by the EU parliament next year. The credit fees will be capped at .03 percent of the transaction value while debit fees (for both cross border and domestic) capped at 0.2 percent. It also will change the rules that retailers will have to honour all cards, as at present, and choose which cards they can accept. So the retailer will have choice in which card they choose to accept in theory.

The rules do not cover Commercial Cards used for business expenses, and so no price cap will be in place. This means that providers could well be charging well over the capped rates. So a business dealing with both Commercial and private customers will see different charges, the profitability of each type of transaction will be affected. At GDC Bookkeeping we work with our clients to control cost and will be monitoring Merchant card processing costs to see the impact this has on them. We help our business owners by recording these charges in their accounting systems, so that they can be identified and reports promptly raised. Decisions can then made to both improve the profitability of business and maintain control of costs.